Image:Israeli's know this area as Temple Mount, Palestinians as Haram esh Sharif

Most countries agree its status can only be settled by inclusive negotiations and do not recognise Israel's claim to the entire city.

Israel insists it has been the capital of the Jewish people for 3,000 years and the country's capital for 70 years.

Its prime minister, Benjamin Netanyahu, praised a "courageous and just decision" and said it was a "historic day", as he urged other countries to follow America's lead.

David Keyes, Mr Netanyahu's spokesman, told Sky News it "moves peace forward in a very clear and simple way".

He said it corrected "a historical anomaly, a great historical mistake that denied Israel the same right that every other country around the world has, which is to define where its capital is".

This is a historic day. Jerusalem has been the capital of Israel for nearly 70 years. Jerusalem has been the focus of our hopes, our dreams, our prayers for three millennia. Jerusalem has been the capital of the Jewish people for 3,000 years. Thank you, @realDonaldTrump! 🇮🇱🇺🇸 pic.twitter.com/mWCUpUMpiC

Palestinians however want East Jerusalem to be the capital of their future state - Israel captured and annexed the area in 1967.

President Mahmoud Abbas reacted to the US move by calling Jerusalem the "eternal capital of the state of Palestine".

World powers have also been quick to condemn Mr Trump's move.

British Prime Minister Theresa May said in a statement: "We disagree with the US decision to move its embassy to Jerusalem and recognise Jerusalem as the Israeli capital before a final status agreement...

Image:Israel celebrated by projecting flags on to the walls surrounding Jerusalem's Old City

"Our position on the status of Jerusalem is clear and long-standing: it should be determined in a negotiated settlement between the Israelis and the Palestinians, and Jerusalem should ultimately be the shared capital of the Israeli and Palestinian states."

France's president Emmanuel Macron told reporters: "This decision is a regrettable decision that France does not approve of and goes against international law and all the resolutions of the UN Security Council."

Image:Protesters gathered at the US consulate in Istanbul after Mr Trump's announcement

Iran's foreign ministry said the "provocative and unwise decision" would "provoke Muslims and inflame a new intifada and an escalation of radical, angry and violent behaviour".

Turkey called it "irresponsible" while Egypt's foreign ministry also rejected the US President's declaration.

UN chief Antonio Gutteres said he was "against any unilateral measures that would jeopardise the prospect of peace for Israelis and Palestinians" and that there was "no plan B" to a two-state solution.